Investors Retreat From Gundlach’s Flagship Fund

Jeffrey Gundlach’s biggest bond fund is getting smaller. The Wall Street Journal reports that DoubleLine Total Return Bond Fund(DLTNX) is losing investors, with assets under management dropping 13% to $53.6 billion off the peak it hit in September 2016.

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Investors have pulled $8.5 billion from the fund in that period, Morningstar Inc. says, while funds in the same category took in net inflows of 7.2%. The fund has had outflows in each of the past nine months. DoubleLine said inflows in the fund for August so far are net $230 million.

...Among those bailing are individual investors, who helped fuel the fund’s growth but can be quicker than institutions to pull their funds when performance lags. Barney Rothstein, a retired orthodontist in Tucson, Ariz., withdrew $250,000 from the fund over the past 18 months and shifted the money to individual bonds that carry similar yields but can be held to maturity, unlike a bond fund, potentially giving an investor more cushion if the market turns down. “The extra return wasn’t there anymore,” he said.

Analysts say success sometimes hurts funds by raising the bar for the future.

Gundlach, the co-founder and CEO of DoubleLine Capital, has spoken publicly about the dangers of getting too big.

Over a six-year span, the Total Return Bond fund grew into one of the most successful new bond funds ever, amassing assets totaling $61.7 billion before the outflows began last year.

Annualized returns over the past three and five years have outperformed 89% of peer funds. Since the start of 2017, however, the fund has gained 3.5% and bested 59% of competitors, according to data from Morningstar.

A DoubleLine spokesperson told the Wall Street Journal that the firm was not troubled by the outflows.

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